Royal Bank of Canada profit beats, ups dividend

RitaTrichur

Royal Bank of Canada, Canada's second-largest lender by assets, raised its dividend and reported a fiscal first-quarter profit that rose 17% from a year earlier, beating expectations.

Toronto-based RBC said Wednesday that its earnings set a record and were fueled by strong contributions from retail banking and its capital markets division.

RBC is the second big Canadian lender to report results this week. Its results stand in strong contrast to those from Bank of Montreal, which on Tuesday posted a lower first-quarter profit that missed expectations due to swooning oil prices, sliding interest rates and a sinking Canadian dollar. Analysts had expected those challenges to dent the results of other Canadian banks for the November-to-January quarter.

RBC posted a net profit of 2.46 billion Canadian dollars ($1.97 billion), or C$1.65 a share, in its latest quarter. That compared with a profit of C$2.09 billion, or C$1.38 a share, a year earlier.

On an adjusted basis, which excludes extraordinary items, RBC said it earned C$1.67 a share, beating the Thomson Reuters mean estimate of C$1.58 a share.

In conjunction with its earnings, RBC announced it would increase its quarterly dividend by 3%, or 2 Canadian cents, to 77 Canadian cents per share.

"We delivered a record first quarter, with earnings of over C$2.4 billion, reflecting the strength of our franchise and our commitment to serving our clients," said Chief Executive Officer Dave McKay in a release.

"Looking ahead, we are confident that our diversified business model, with our strong risk and cost management capabilities, positions us well to navigate macroeconomic headwinds in Canada and continue to capitalize on opportunities created by the changing environment," he added.

The bank's Basel III Common Equity Tier 1 capital ratio stood at 9.6% at the end of the first quarter.

Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, ranking first and fifth in size, respectively, are scheduled to report results Thursday. Bank of Nova Scotia, the country's third-largest lender, will cap off bank earnings season on March 3.

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